BE CREATIVE - CALL THE BANK! - CULTURAL AND CREATIVE SECTORS GUARANTEE FACILITY Brussels, 22 March 2019 - European Investment Fund
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BE CREATIVE
– CALL THE
BANK!
CULTURAL AND CREATIVE SECTORS GUARANTEE FACILITY
Brussels, 22 March 2019
How to become a
successful creative and
get financed!
2
WELCOME!
9:30 - 10:00
Introduction – The CCS Guarantee Facility
CHIARA Amadori, EIF
PASCAL Martino, DeloitteAgenda of today
Time Programme
Introduction – the CCS Guarantee Facility
9:30 – 10:00
Functioning, aim, prospects and implementation status
Financing Gaps in CCS
10:00 – 10:50
Moderated Panel Discussion on financing gaps with CCS entrepreneurs – Q&A
Financing the CCS
10:50 – 11:40 Moderated Panel Discussion on the experience of financial institutions when
dealing with CCS – Q&A
11:40 – 12:00 Networking break
The Capacity Building Activities
12:00 – 12:45
Tools, key findings, CCS potential and trends – Q&A
12:45 – 13:00 Closing remarks – European Commission
4The first financial instrument for CCS
Key facts and figures
Broad coverage of the cultural and creative • Delegation Agreement signed on
sectors 30 June 2016
• Call for Expression of Interest
Audio-visual (film, television, video games, published on 18 July 2016
and multimedia) and radio; Cultural heritage, Under • First 2 applications received on
5 August 2016
archives, libraries and museums; Artistic implementation
crafts; Design; Festivals, music; Literature • EFSI top-up signed on 12
(books and press) and publishing; Architecture since December 2017
and Performing arts
€181m EU 2.5 Years
Contribution • Almost all eligible NACE codes
€121m from the Creative covered to date*
• EUR 110m of financing already
Europe Programme guaranteed*
& + €70m
€60m from the European to be
12 Fund for Strategic added
Agreements Investments soon 800*
signed CCS ventures
Managed by the European supported so
• 11 Agreements with
national scope
Investment Fund Capacity far
• 1 Multi-country 9 Building
agreement Participating launched in Almost
Countries
2 May 2018 €1bn
Additional Financing to
applications be made
available
* As of December 2018
5The first financial instrument for CCS
Basic mechanics
Through the risk sharing mechanism, EU helps bridging the financing gap for CCS
1. 2. 3. 4. CCS SMEs &
Financial
Small Public
The EIF deploys the Intermediaries
Creative Europe
& #InvestEU
allocated budget through
financial intermediaries
Enterprises
in the form of free-of-
The European charge capped (counter-) Financial Intermediaries CCS SMEs & Small Public
Commission guarantees & provides are more willing to Enterprises are able to
allocates a specific capacity building extend financing to CCS bring their creative
budget to the CCS services to develop the SMEs and are more open ideas into life!
GF and mandates its in-house necessary to expand their
management to the expertise to financing operations in the CCS
EIF CCS field
6The first financial instrument for CCS
How it works
Financial intermediary’s portfolio of CCS related CCS GF’s capped (counter-) guarantee
transactions to SMEs proposed features
Structured in the form of guarantees or counter-
(Counter-) Guarantee Rate on a guarantees
loan-by-loan basis: usually 70%
Free-of-charge (counter-) guarantee
(Counter-) Guarantee rate typically set at
max. 70%
Risk retained by
the Financial (Counter-) Guarantee cap rate: 10%, 18% or 25%
Intermediary
minimum 20% of (Counter-) (Counter-) Guarantee term: 10 years
the original Guarantee Cap
portfolio Rate: 25%,18% Pari-passu ranking
or 10% based
on State aid consistent
EIF’s
professional Free-of-charge customised capacity building
judgement) services
EIB Global Loan could be used to partially fund the
portfolio (optional, subject to EIB approval)
7The first financial instrument for CCS
Eligible entities and Debt Financing
SMEs* and Small Public Enterprises** that: Debt Financing where
Have a CCS NACE code (45); or Max loan amount:
Intend to develop a CCS project with the debt EUR 2m
financing; or Min Maturity:
In the last 24 months before the transaction 12 months
approval:
Purpose:
– Have been operating in the field of CCS;
or Investment
– Have received debt financing for a CCS Business Transfer
project by European or national CCS Working Capital
institution/association; or Max Collateral Requirements:
– Have been awarded a CCS prize; or Assets used for the business
– Have filed copyrights, trademarks, activity
distribution rights, etc. in the CCS field; Personal guarantee from the
or owner(s)
– Have benefitted of tax credit/exemption
related to development of intellectual
property rights or CCS activities
* As per the EU definition
** Entities that do not fall under the scope of SME definition exclusively due to detention of shares of the SME by public bodies 8The first financial instrument for CCS
State of play
12 agreements signed with a total expected debt financing of almost EUR 1bn
corresponding to an aggregated budget allocation of c. EUR 84m
Agreements signed:
Start of
Availability
Country Intermediary Period
Spain CERSA 01/01/2017
Romania Libra Internet Bank 01/03/2017
France Bpifrance 01/05/2017
France IFCIC (2 agreements) 25/07/2017
Belgium PMV 19/12/2017
Belgium Start SA 19/12/2017
Czech Rep. Komercni Banka 19/12/2017
Italy CDP 28/03/2018
Poland BGK 01/01/2019
Denmark Vaekstfonden 01/11/2018
Portugal CGD 15/11/2018 9 countries where agreements have been signed
2 additional countries where applications have been received
4 additional countries where SMEs have been supported
through IFCIC counter-guarantees
For more details visit EIF’s website!
9The “EIF Faces” in the room today
CHIARA LAOURA
Amadori Ntziourou
+352 2485 81629 +352 2485 81839
c.amadori@eif.org l.ntziourou@eif.org
DAVID GUNNAR
González Martín Mai
+352 2485 81434 +352 2485 81358
d.gonzalezmartin@eif.org g.mai@eif.org
10The Capacity Building activities
Meet the Consortium
Pascal Martino Andreas Steinbach Arthur Le Gall
Partner Manager Director
Banking Leader EU & PS Policy KEA European Affairs
Deloitte Digital Leader asteinbach@deloitte.lu alegall@keanet.eu
pamartino@deloitte.lu +352 45145 3482
+352 45145 2119
Carlo Duprel Philippe Kern
Director Founder & Managing
EU & PS Policy Leader Director
cduprel@deloitte.lu KEA European Affairs
+352 45145 3001 pkern@keanet.eu
+32 2 289 26 07
11The Capacity Building activities
Tailored to the needs & experience of each FI
The Consortium providing Capacity Building services under the CCS GF is composed of:
Deloitte a professional services organization with dedicated teams with Financial Services
expertise based in all 28 EU Member States and in candidate countries
KEA European Affairs an international policy design research center specialised in culture
and creative industry economics since 1999
Experts in specific CC sub-sectors who are selected based on each FI’s specific need in
terms of Capacity Building
As FI’s have different degrees of maturity regarding their experience and commercial
involvement with the CCS, the proposed Capacity Building service is built on two pillars:
1. A modular approach that assists us in identifying each FI’s CCS maturity and needs in terms
of Capacity Building
2. A flexible approach that ensures that your Capacity Building action plan responds to your
specific needs
The Consortium collaborates closely with EIF to ensure that the Capacity Building services
provided support the objectives of the CCS GF
12FINANCING
GAPS IN CCS
10:00 - 10:50
Panel Discussion and Q&A
PHILIPPE Kern, KEAArchikubik
14Meet the Sector
Franky Devos Edouard Meier
General Director, Creatis
Coordinator, Benelux
Vooruit, Ghent
Laurent Jacobs Mélanie Querriaux
Group Finance Director, Business Affairs Manager,
[PIAS] Editions Dupuis, Webtoon
15FINANCING
THE CCS
10:50 - 11:40
Panel Discussion and Q&A
CARLO Duprel, DeloitteMeet three Financial Institutions
actively supporting the Sector
Virginie Civrais Lola Merveille
General Manager Head of EU Public
St’Art Affairs Office,
Bpifrance
Marie Delbeke
Senior Investment
Manager, PMVLET’S HAVE A
COFFEE
11:40 - 12:00
Networking breakTHE CAPACITY
BUILDING
ACTIVITIES
12:00 - 12:45
CB Tools, key findings, CCS potential and trends – Q&A
ANDREAS Steinbach, Deloitte
ARTHUR Le Gall, KEAThe Capacity Building activities
Tailored to the needs & experience of each FI
Motivation behind Capacity Building:
While the risk-sharing mechanism of the CCS GF incentivizes Financial Intermediaries (FIs) to
extend loans to CCS companies, FIs require further support.
A main reason for this is FIs’ limited experience of engaging with CCS companies and
understanding of the underlying business models.
To overcome this, Capacity Building will help you…
…Understand the business models and specificities of operators of the CCS,
…Market financial products to the CCS market and build a prospecting strategy,
…Assess the credit risk associated with SMEs in the CCS within the specific context of CCS value
chains and B2B relationships,
…Broaden your financing activities to new sub-sectors within the CCS.
Within the context of the CCS Guarantee Facility, Capacity Building is optional, free of charge,
can be delivered on-site or virtually and will be tailor made to your specific needs.
20The Capacity Building activities
Two phases approach to match your specific needs
Phase 1: Design of CB Action Plan Phase 2: Delivery of CB Action Plan
Market study of local CCS sub-sector
Collect all relevant information
from EIF and FI 1-2 day workshops at FI premises:
Identify local expert on financing - Training modules executed as
in CCS agreed upon
Present CP Building approach to FI - Delivery of standard documents
Select pre-defined modules and Monitoring and support of FI activities
adapt if necessary Assessment of CB impact
Define additional modules upon Workshop at FI premises
request of FI
Satisfaction survey and final report
21The Capacity Building activities
Standard framework but customised action plan
Module 1: Module 2: Module 3:
Module 4:
Understanding CCS Adaption of Risk
On-the-job
market & marketing to assessment
support
opportunities CCS aspects
Objective
Explain the CCS Provide guidance on Provide support to FIs
Prepare a marketing
market and key assessment of specific when engaging with
strategy to CCS
stakeholders CCS risks CCS entrepreneurs
Prepare local CCS Prepare marketing Prepare risk Provide on-the-job
Activities
market study strategy assessment report support to FI:
Provide face-to- Provide face-to- Provide face-to- Hotline
face and digital face and digital face learning and Weekly calls
learning learning digital learning Etc.
Local CCS market CCS marketing Risk assessment Access to on-the-
Output
study strategy report job support when
Workshop/e- Workshop/e- Workshop/e- engaging with CCS
learning learning learning entrepreneurs
22The Capacity Building activities
FIs are making use of all offered services
Module 1: Module 2: Module 3:
Module 4:
Understanding CCS Adaption of Risk
On-the-job
market & marketing to assessment
support
opportunities CCS aspects
1 E-learning to train
Completed
1 CCS market study 1 CCS loan risk Analysis of CCS
sales staff
at EU level assessment guide needs in terms of
Support in rollout of financial products
2 CCS workshops in 2 CCS workshops in
CCS marketing offered for 1 FI
2 countries 2 countries
campaign
Support in the
identification of CCS
Ongoing/planned
1 Vademecum for
investors (VC, FO,
CCS entrepreneurs
4 CCS workshops 4 CCS workshops BA) for 2 FIs
2 E-learnings to
planned including planned covering Analysis of cash flow
train sales staff
the provision of a the CCS loan risk sources (public vs.
local market study Organisation of a assessment process self-generated
networking event sources)
for 1 FI
Other on-the-job
support
23The Capacity Building activities
Three recurring misconceptions about CCS
1.
“The CCS is a
2.
“Survival rates
3.
“The evaluation
negligible sector of CCS of CCS
that does not companies are companies is too
compare to other lower than those complex and
sectors” of other sectors” time consuming“
241
The CCS is a negligible sector that
does not compare to other sectors
Accommodation
Criteria ICT CCS
and food services
Percentage of EU
4%(2015) 4%(2015) 4.2%(2014)
GDP (2015)
EUR 252.9
Value added* EUR 570 billion(2015) EUR 290 billion(2016)
billion(2015)
Employment 6.3 million(2015) 11.1 million(2015) 6.7 million(2016)
Number of
1.1 million(2015) 1.9 million(2015) 2.45 million(2016)
companies
Average company 5.73 employees per 5.84 employees per 2.7 employees per
size company(2015) company(2015) company(2016)
(Employment /Number
of companies)
*Please note that the figure shown for Value Added is a conservative estimate based on Eurostat data.
There are estimates that evaluate it to be significantly higher i.e. on par with ICT.
252
Survival rates of CCS companies are
lower than those of other sectors
Survival rates of CCS companies after 1, 3 and 5 Survival rates of CCS companies after 1, 3 and 5
years match those of a benchmark of all services years are similar to those in the ICT and
enterprises Accommodation and food sectors
CCS
All Services F&A
benchmark ICT
263
The evaluation of CCS companies is
too complex and time consuming
Top down and macro- Bottom up & micro- Mixed approach specific
Approach economic economic to sub-sector
3. Closing and
Phase 1. Origination 2. Underwriting
monitoring
1.1 CCS sector
2.1 CCS SME risk
awareness Signing & Closing*
1.2 CCS Industry risk 2.2 Owner’s track record
Key steps 3.1 Monitoring
1.3 CCS strategy &
2.3 Risk mitigation
prospecting
3.2 Distressed
1.4 Partnering & support
Structuring* situations management
schemes
27The Capacity Building activities
Four Key Lessons Learnt
1. 2.
FIs’ level of maturity, in terms of
Support from local CCS expertise is
experience with the CCS, varies
very valuable
greatly
- Some FIs have sub-sector specializations while - Local CCS expertise centres such as Creative Europe
others are not as advanced Desks, trade associations etc. have very valuable
insights and long-term knowledge of the various
- The sectorial focus of FIs varies greatly especially industries
among countries
- This should go hand in hand with Capacity Building
3. 4.
Risk assessment of CCS loan There is potential to improve the
applications remains a key hurdle but quality and quantity of CCS loan
is feasible if FIs understand applications
- Collaboration between FIs and CCS entrepreneurs to
- The value chains of CC sub-sectors and related help improve the quality of loan applications and
business models thus access to finance
- The revenues generated and funding needs along - Raising awareness about potential & specificities of
the value chain CCS among FIs (particularly commercial staff and
members of the credit department) will support
- B2B relationships and the role of IP sourcing of loan applications and the marketing of
financial products towards the CCS
28LOOKING AHEAD
The CCS market in the EU and
future trends
29The CCS market in the EU
The CCS represents a key market for the EU in terms of size, employment and
value added
In 2016:
The CCS represents more than 6.7
million employees in the EU
The CCS accounts for 2.45 million
companies
Total value added amounts to EUR 290
billion
CCS Share of employment out of total
employment
≥4.0%
3.0 – 4.0%
2.0 – 3.0%
1.0 – 2.0%
30The CCS market in the EU
All CCS sub-sectors have seen an increase in the number of companies in past
years
Distribution of companies by CCS sub-sector in 2016
15,249 179,812
786,077
299,918
582,496
2,450,237
372,465
214,220
Total number Heritage, Audio-visual & Performing Architecture Visual Arts Books & Press Other cultural
of companies Archives & Multimedia arts and creative
in CCS Libraries sectors
activities
CAGR
2008- +4% +4% +6% +6% +1% +6% +1% +3%
2016
31The CCS market in the EU
Overall, employment in CCS has grown since 2008 with some sub-sectors
seeing significant growth rates
Distribution of persons employed by CCS sub-sector in 2016
160,862 754,099
1,611,426
603,538
1,271,468
6,728,985
1,507,896
819,696
Total persons Heritage, Audio-visual Performing Architecture Visual Arts Books & Press Other
employed in Archives & & Multimedia arts cultural and
CCS Libraries creative
sectors
activities
CAGR
2008- +1% +3% +3% +2% +1% +3% -3% +4%
2016
32The CCS market in the EU
Value added in the CCS has seen constant growth in past years reaching EUR
290 billion in 2016
Value added at factor cost
Average (accross all sub-
41,747 €
sectors)
Other cultural and
36,565 € For the period 2008-2016 value
creative sectors…
added has consistently grown
Audio-visual &
63,507 €
Multimedia All sub-sectors except one have
seen growth in value added
Performing arts 47,629 €
Audio-visual & Multimedia as well
Architecture 25,674 € as Books & Press yield the highest
value added
Visual Arts 40,597 €
Books & Press 76,242 €
33Trends in CCS
Within the context of the financial crisis & globalisation the digital shift opens ways for
new funding streams
Specific trends in the Audio-visual sector
General Trends
(Cinema, animation, video games)
Increase in crowdfunding: There have been Decrease in advertising income in Television
75,000 campaigns in CCS since 2013 Less public funding but more tax incentives:
Importance of multinationals in films, music, - France, UK, Ireland, Belgium, Lithuania,
games and fashion to fund indie brands and Hungary, Italy
talent - in Europe EUR 3 billion total public
Increase in public funding in relation to urban support per year with EUR 1 billion
regeneration (real estate), creative spill overs, through tax incentives (2013)
innovation, regional, social and education New business models (Netflix) – buy-out outside
policies versioning cycles
Overall public funding is a risk mitigating factor Increase in international co-productions in
films (to leverage public support)
34Trends in CCS
Increased demand for content from global media/tech platforms
160 35%
Hours commissioned content
140 30% Netflix announced USD 10 billion
Int’l share of hours (%)
investment in content (2018), 1
120 billion in Europe (Source FT
25%
18/04/2018)
100
20% Alphabet/Google and Apple are
80 announcing huge investment to
15% produce content on dedicated
60
platforms (FT 05/02/2019 & FT
10% 19/03/2019)
40
Subscription VOD service revenue
20 5%
in Europe grew by 128% annually
0 0% between 2011 and 2016 (EAO, 2019)
2013 2014 2015
USA International Share int'l hours
35Trends in CCS
Global recorded music industry revenues 2010-2017
(USD billions)
20
18
16
14
12
10
8
6
4
2
0
2010 2011 2012 2013 2014 2015 2016 2017
Physical Digital (excluding streaming) Streaming Performance Rights Synchronisation Revenues
Source: IFPI Global Report 2018
36Trends in CCS
European leadership in fashion - Market leaders pulling smaller actors
Global sales (EUR bn)
300 Europe is leading in fashion, with
several multinational firms such as
250 LVMH, Gucci, Hermes, Burberry or
Richemont
200 Global sales of luxury goods were
almost multiplied by three in the
last twenty years
150
Important investment in
craftsmanship (France, Italy) to
100
keep up with demand on quality
products (leather, glass, ceramics,
50 embroidery)
Demand fuelled by consumers in
0 developing economies (China
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
notably)
Source: FT, “How Europe has become a powerhouse in luxury”
37Trends in CCS
The subscription model is replacing the traditional ownership model, giving
CCS new growth opportunities
Evolution - Number of Spotify paying subscribers (millions) – July 2010 to Jan 2018
70
65
60
57
50
39 40
30
20
12.5 15
10
4 5 6
0.5 1 1.5 2.5 3
38Trends in CCS
Growth forecast for entertainment and media predict fast growth for virtual
reality and over-the-top videos
Total E&M revenue with and without access spending (USD bn) – 2017 - 2022
2,375 2,400
2,250
2,125
2,010
1,900
1,675
1,500 1,530 1,570
1,480
1,375
Total E&M
Excl. Access
2017 2018 2019 2020 2021 2022
39Trends in CCS
The global video games market is growing rapidly due to the expansion of new
technologies
There is strong growth in the global video games The biggest players in the European video games
market with Mobile games taking up the lion market account for revenues of up to EUR 15
share of the market in 2018 (EUR, billion) billion (EUR, billion)
155
146
133 4.1 4
121
107
57%
94 57%
54% 2.7
82 51%
75 46%
67 40%
62 34% 1.8 1.8
29%
18% 23%
22% 21% 19%
30% 27% 24%
37% 38% 36% 34%
22% 0.4
45% 39% 35% 32% 30% 27% 25% 24% 23% 0.2
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Germany UK France Spain Italy Poland Romania
Console games PC games Mobile games
40The Capacity Building activities
Conclusions
Capacity building is tailored to FIs needs and level of CCS maturity. Under the
CCS GF it is optional and free of charge
The risk assessment process necessitates an understanding of CCS specificities
The CCS represent an important contributor to the EU economy and European
companies are globally leading in several sub-sectors
Digitalization and globalization have created new business opportunities
The majority of CCS sub-sectors have seen growth in terms of the number of
companies, employment and value added over the past 10 years
Thanks to the CCS GF, there are significant opportunities in Europe
for FIs to improve access to finance to the CCS
41Q&A
42LET’S
WRAP
UP
12:45 - 13:00
Closing remarks
LUCIA Recalde
Head of Unit, DG CONNECT,
European Commissionhttp://www.eif.org European Investment Fund (EIF) European Investment Fund (EIF) European Investment Fund (EIF)
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